Unkovic said he won’t refer the matter to the U.S. attorney’s office or ask any other agency to investigate the alleged corruption, but instead will continue pushing his fiscal recovery plan.

View full sizeCHRISTINE BAKER, The Patriot-News, fileHarrisburg receiver David Unkovic, right, said Thursday he won't refer the matter to the U.S. attorney's office or ask any other agency to investigate the alleged corruption, but instead will continue pushing his fiscal recovery plan.

“I am not involved in any criminal aspects,” Unkovic said. “I am focusing on the fiscal recovery of the city.”

It’s pointless for Unkovic to contact the U.S. attorney’s office or any other federal agency to investigate the matter anyway because the City Council has already done that, said Mark Schwartz, the attorney the council hired to file its failed bankruptcy petition.

A majority of the council opposes Unkovic’s plan and has asked the U.S. attorney’s office to investigate the financial deals related to the retrofit of Harrisburg’s incinerator that buried the city in more than $317 million of debt.

This week, the council shared a response letter it recently received from Peter Smith, U.S. attorney for the Middle District of Pennsylvania.

Smith told the council it would be inappropriate to comment on whether an investigation is under way, but acknowledged that the issue was of “great importance to the citizens of Harrisburg,” and “that the subject matter of it is under review” by his office.

Smith also said a forensic audit on the incinerator project commissioned by the Harrisburg Authority was sent to the Securities and Exchange Commission and other federal agencies.

The audit, which was released in January, points fingers at former long-term Mayor Stephen R. Reed, local officials and attorneys and consultants who helped get the incinerator deal done.

Unkovic hasn’t pointed fingers.

But contending there is corruption behind the city’s fiscal crisis means Unkovic should sit on his plan because it involves repaying creditors that helped put the city in such a dire fiscal situation, Schwartz said.

“How can you be in two places at once when you are nowhere at all?” Schwartz asked. “These deals didn’t happen by themselves. [Unkovic] says time and time again the [incinerator bond insurer Assured Guaranty] is a creditor. [Assured] was involved intimately in structuring these deals. That’s what is so ridiculous about this process.”

Messages left for comment with Reed at his office, Reed Strategic Advisors, were not returned.

A spokeswoman for Assured, which insured most of the bonds issued to bankroll the incinerator project, said she could not immediately respond to an interview request for this story.

On Wednesday, Unkovic lost his composure and made disparaging remarks about the city’s past financial deals during a hearing in federal court regarding whether three community activists have the right to challenge the constitutionality of the state takeover of Harrisburg.

Unkovic said during the hearing that the city has been mismanaged for 20 years and Harrisburg’s financial picture is nothing more than a house of cards that is about to fall.

Schwartz said those kind of comments make it hard to understand why Unkovic is willing to proceed with a plan that strips the city of its assets.

“[Unkovic] should pick up the phone, and we should talk about suing some people,” he said. “The city can’t be corrupt by itself. There were plenty of people who got well paid to help the city become corrupt.”

Attorney Neil Grover, founder of the community watchdog group Debt Watch Harrisburg, was questioning Unkovic when the receiver became impassioned and called the city corrupt in court.

The state statute that appointed Unkovic as receiver late last year doesn’t give him the power to lodge criminal charges against anyone; his job is to turn around the city’s finances, Grover said.

“He can create leverage, but he has no power to prosecute anyone,” Grover said. “Since he cannot bring criminal charges, there is no point in him pursuing things he has no power to do.”

Attorneys that make up Unkovic’s legal team are reviewing the Harrisburg Authority’s forensic audit, but Unkovic would not comment on whether his legal team will seek criminal action against Reed, other officials and creditors that helped get questionable incinerator deals done.

Gov. Tom Corbett’s office did not return repeated calls to find out whether the governor will ask the state attorney general’s office to investigate Harrisburg’s debt crisis.

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